Question

In confirming with an outside agent, such as a financial institution, that the agent is holding investment securities in the client's name, an auditor most likely gathers evidence in support of relevant financial statement assertions about existence or occurrence and:_______.
1. Completeness.
2. Valuation and allocation.
2. Valuation and allocation.
3. Rights and obligations.
4. Classification and understandability.

Answer 1

Answer:

3. Rights and obligations.

Explanation:

This evidence is in support of relevant financial statement assertions about existence or occurrence and Rights and obligations. Even though a specific confirmation request does not test all assertions equally well. Especially since more than one agent may be holding securities for a single client which may or may not be specified within the request.